I really don't get what they would be missing though: "foreign" (e.g. internet) brands would usually be rejected before that price hike anyways (unless workshop capacity is desperately idle) and preferred customers (qualified by bike purchase) could still be offered arbitrary service discounts. Is it really just the old bait and switch of offering to service a clunker for the price of a hamburger and then suddenly realizing that the bike is impossible to salvage if the customer happens to be not utterly wrong size for that unloved bike that has been clogging inventory for three years?
No bait and switch, and my experiences aren't from the boom period so take my commentary with a grain of salt. What I can tell you is that there is an immense amount of pressure from competitors and from customers to keep service prices low. So the prospect of raising service prices is challenging when your customers are spoiled with cheap labor.
Also, servicing a lower-end bike ends up meaning the service is a large percentage of the original cost. So the prospect of paying, say, $150 for a tune-up, cables, and a new chain on a $400 bike feels excessive. But if you do it for any cheaper than that, you are either compromising the quality of your work or compromising your ability to turn a profit.
Sure, a "boutique bike service station" certainly wouldn't attract your typical Wal-Mart bike owner. But those bikes won't be served by the bike shop that runs the workshop at a loss for his loyal bike buyers either.
That part of the market is usually served, quite well actually for both sides, by a shop that is one third preowned bikes, one third budget parts and one third highschool job repairs (sometimes they also rent out the preowned). Lifesavers for my theft-immune three speed (they'll happily take on daring salvage operations nobidy else would even attempt), but I surely no place were I'd leave one of my Campag steeds even for just a tire inflation.